What to Do With Your First Million Dollars

Today, 32 of the country's most talented college football players will be selected in the first round of the NFL Draft, instantly becoming millionaires-in-waiting despite being barely old enough to celebrate the occasion by buying a drink. Over the next two days, 221 more players will hear their names called, and many more after that will join teams as undrafted free agents and report for training camp in the fall. In short, there are about to be a lot of newly-minted dudes out there who are varying degrees of rich, and most of them—again, since they're barely old enough to buy that drink—have never seen that kind of money in their lives. As a former 22-year-old male who was as fascinated at that age by credit cards as I was uninterested in retirement savings, I can envision all kinds of ways in which adding millions of dollars to that equation could go horribly wrong.

Mark Doman is one of a handful of financial advisers who specialize in helping athletes, entertainers, and other young people who have earned fabulous amounts of money relatively early in their lives to figure out what to do with all that money for the balance. We spoke to Mark, whose firm, the Doman Group, has been diligently prepping its clients in anticipation of this week's draft, about what to splurge on, what to skip, and how to make your first million dollars turn in to many more.

Lesson No. 1: Triage, triage, triage.Once your first paycheck clears, make a wish list and divide it into two columns—one for things you need, and one for things you want. (Doman concedes that he sometimes has to gently help clients see how some of their "needs" should be shifted over to the second column.) A helpful way to think about splashy purchases, whether on a home, a car, or whatever else tickles your fancy, is the room you'll leave to look forward to even shiner things in the future. Doman tells the story of one of his probably-Canton-bound clients who wanted to buy a rare luxury car that, although his income would support it, would still cost well into the six figures. His response? "How will you ever get excited about buying any vehicle after that?" The player, after thinking it over, decided to skip the car after all.

Lesson No. 2: Pay attention to where your money is.Financial literacy is the bedrock of a having a smart investment strategy, and Doman tells his clients that they're not ready to invest their first dollar in anything until they're able to explain why they are making a given choice. To clients who simply wave their hand and tell him that they trust him, he'll reply, "It's great that you trust me, but it's even better if you understand me." (Side note: He says he has many of them come into his office for short-term internships during the NFL offseason, where they spend time working on their own portfolios and learning what it means to manage their money. As proof, Doman texted me a picture of him in the office standing next to New York Giants linebacker Jonathan Casillas, who was diligently poring over some important-looking paperwork.)

Lesson No. 3: Have an actual strategy.One of the biggest mistakes players make, Doman explains, is acquiring things, making investments, and allocating their money in a piecemeal fashion, without a big-picture financial strategy in place. Although every client is different, with variations in things like—feel free to look away if you aren't actually a millionaire—earning potential, anticipated career length, spending habits, and risk tolerance, he generally recommends that they invest in some combination of investment-grade, short-duration bonds; especially for players with longer investment horizons, blue-chip stocks that reliably yield dividends; and, once a player has some geographic stability, a home that they can commit to for between 7 and 10 years.

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Lesson No. 4: Avoid banking on things that aren't actually investments.Yeah, lots of players want to celebrate their selection by getting themselves a present—most often, according to Doman, this comes in the form of a very nice car. But other than that, he strains to discourage myriad extravagant impulse buys and warns clients to stay away from investing in their uncle's business idea or the apartment complex their friend wants to buy. Doman explains to clients that they can do those things, if they're so inclined—it's their money, not his, he repeatedly notes—but that they should budget for that expense, rather than treat it as they would an investment in a stock or bond.

Lesson No. 5. Have some damn perspective.Doman guesses that in the moments leading up to last night's first round, there were at least 100 players who were sure that they would hear their name called that night, which means that 64 walked away knowing that they'll soon be earning significantly less money than they expected. This is perfectly okay, but it also requires that clients adjust their expectations, and if their locker is situated between a vet who drives a $200,000 car and another vet who drives a $150,000 car, even a $90,000 car might feel woefully inadequate. Doman encourages clients who harbor those types of worries to think about their success relative to their other college classmates, most of whom won't be sniffing purchases like that for years, if ever. It's all about context.

Lesson No. 6: Remember, this job looks different.God willing, your first entry-level paycheck out of college will be the leanest of your career, and after rent and groceries and the occasionally $2 Corona happy hour, there won't be a whole lot of cash left over for investment and savings, anyway. For NFL players, though, the calculus is reversed—their first paycheck will often be the largest they'll ever see, which means that the investment choices they make early on will affect them for the rest of their lives. At some point, these guys are going to go from making five figures a week to, in many cases, five figures a year. To make matters worse, although NFL careers are startlingly brief, the aura of invincibility endemic to 22-year-old men means that they probably won't appreciate the import of their decisions at the time the first direct deposit hits. The financial adviser's job is to teach the client how to put this money to work early, so that, God willing, it's still around long after their playing days have concluded.

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